Tiscali 2012 Annual Report Download - page 66

Annual financial report as at 31 December 2012
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Date File Name Status Page
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Annual Report as at 31
December 2012 66
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shareholders of the Parent Company without recording any goodwill and without producing
any effect on the result and the total shareholders’ equity.
Changes in the consolidation area
The consolidation area of the Group includes the financial statements of Tiscali S.p.A. (parent
company) and the companies the latter directly or indirectly controls starting from the date on which it
was acquired and until the date on which control ceases. These consolidated subsidiaries are listed in
the note List of subsidiaries included in the consolidation area. Changes in the consolidation area
during 2012, when compared with the consolidated financial statements at 31 December 2011, are
illustrated as follows.
Companies removed from the consolidation area:
- Tiscali Contact S.r.l.: on 7 May 2012 the process for the merger via incorporation within Tiscali
Italia S.p.A. was completed, with accounting effect as from 1 January 2012;
- Tiscali International Network SA: on 30 November 2012, the company was wound up.
Companies joining the consolidation area:
- Veesible S.r.l.: on 15 May 2012, wholly-owned by Tiscali Italia S.p.A.;
- Indoona S.r.l.: on 15 May 2012, wholly-owned by Tiscali Italia S.p.A.;
- Istella S.r.l.: on 15 May 2012, wholly-owned by Tiscali Italia S.p.A.;
Business combinations and Goodwill
The acquisition of controlling interests is accounted for using the purchase method, in accordance with
IFRS 3 – (Business combinations). The cost of the acquisition is measured as the aggregate of the fair
values, at the date of the exchange, of assets, liabilities incurred or undertaken concerning the
acquired company, and the financial instruments possibly issued by the Group in exchange for control
of the acquiree, plus any costs directly attributable to the business combination.
The acquiree’s identifiable assets, liabilities and contingent liabilities (including the respective portions
pertaining to minority shareholders) that meet the conditions for recognition under IFRS 3 are
recognised at their fair values at the acquisition date.
The excess of the cost of the business combination over the Group’s interest in the fair value of the
identifiable assets, liabilities and contingent liabilities recognised represents the goodwill arising on
acquisition that is stated as an asset and initially valued at cost. If, after reassessment, the Group’s
interest in the fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities,
exceeds the cost of the business combination, the excess is booked directly to the income statement.
The interest of minority shareholders in the acquiree is initially stated at the minority’s proportion of the
fair values of the assets, liabilities and contingent liabilities stated.
Following initial statement, goodwill is recorded at cost less any accumulated impairment losses. In
compliance with IFRS 3, goodwill is not amortised, but subject to impairment tests in order to identify
any reductions in value.
Impairment testing on goodwill is compulsorily repeated once a year or more frequently if events or
changes in circumstances indicate a possible impairment, i.e. a loss of value.
The impairment, if any, is identified by means of assessments referring to the ability of each ‘unit’,
identifiable in this case with the subsidiary, to generate cash flows sufficient to recover the goodwill
allocated to the unit. The recoverable amount is the higher between the ‘fair value’ less sales costs
and its utilisation value. The utilization value is determined starting from expected future cash flows